Raytheon Company awarded $74.2M contract for Identification Friend or Foe system retrofits by the Air Force

Contract Overview

Contract Amount: $74,168,439 ($74.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-02-26

End Date: 2026-01-31

Contract Duration: 2,531 days

Daily Burn Rate: $29.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: F15, ACAT III, IDENTIFY FRIEND OR FOE, RETROFIT OF APX-114 AND APX-119

Place of Performance

Location: ABERDEEN PROVING GROUND, HARFORD County, MARYLAND, 21005

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $74.2 million to RAYTHEON COMPANY for work described as: F15, ACAT III, IDENTIFY FRIEND OR FOE, RETROFIT OF APX-114 AND APX-119 Key points: 1. Contract awarded for critical avionics upgrades to existing aircraft. 2. Sole-source award raises questions about potential price overruns and lack of competitive pressure. 3. Long contract duration of over 2500 days suggests significant integration and testing requirements. 4. Firm Fixed Price contract type offers some cost certainty but may not fully mitigate risks. 5. Focus on retrofitting existing systems indicates a strategy to modernize the current fleet. 6. The contract falls under the broader category of defense electronics manufacturing.

Value Assessment

Rating: fair

The contract's value of $74.2 million for retrofitting identification friend or foe (IFF) systems appears substantial. Without specific details on the number of aircraft or the complexity of the APX-114 and APX-119 system upgrades, a direct value-for-money assessment is challenging. However, given the sole-source nature, there is a risk that the pricing may not reflect the most competitive market rates. Benchmarking against similar avionics upgrade contracts for military aircraft would be necessary for a more definitive evaluation of value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach bypasses the competitive bidding process, which typically leads to better pricing and innovation. The lack of competition suggests that the government may have determined Raytheon to be the only capable source, or that urgency and specific technical requirements precluded a broader solicitation. This can limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without multiple offers, there is less pressure on the contractor to offer the lowest possible price, potentially increasing the overall cost of the IFF system retrofits.

Public Impact

The primary beneficiaries are the U.S. Air Force and its operational readiness, ensuring accurate identification of friendly and enemy aircraft. The contract delivers essential upgrades to the Identification Friend or Foe (IFF) systems, specifically the APX-114 and APX-119 models. The geographic impact is likely concentrated around Air Force bases and maintenance facilities involved in the retrofit process. Workforce implications include specialized technicians and engineers required for the installation, testing, and integration of the new avionics components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Long contract duration may indicate integration challenges or scope creep risks.
Lack of detailed performance metrics in the provided data makes assessing effectiveness difficult.

Positive Signals

Firm Fixed Price contract provides cost certainty for the defined scope.
Retrofitting existing systems supports modernization of the current fleet efficiently.
Focus on IFF systems is critical for air combat safety and situational awareness.

Sector Analysis

This contract falls within the aerospace and defense electronics sector, specifically focusing on avionics and identification systems. The market for military avionics is characterized by high barriers to entry due to specialized technology, stringent certification requirements, and long product lifecycles. Major defense contractors like Raytheon dominate this space. Spending in this area is driven by the need for continuous technological advancement to maintain a combat edge and ensure interoperability. Comparable spending benchmarks would involve other major avionics upgrade programs for military platforms.

Small Business Impact

The provided data indicates that small business participation (sb) is false, and there is no indication of a small business set-aside (ss). This suggests that the prime contract is not specifically targeted towards small businesses. While Raytheon may engage small businesses as subcontractors, the primary award does not directly benefit the small business ecosystem. Further investigation into subcontracting plans would be needed to assess the impact on small businesses.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. The Firm Fixed Price nature provides some cost control, but the sole-source award necessitates close monitoring of performance and adherence to the contract scope. Inspector General (IG) investigations could be initiated if performance issues, fraud, or waste are suspected. Transparency may be limited due to the sole-source nature and defense classification, but contract awards are generally reported.

Related Government Programs

Avionics Modernization Programs
Airborne Radar Systems
Military Communications Systems
Defense Electronics Manufacturing
Aircraft System Integration

Risk Flags

Sole-source award
Potential for cost overruns due to lack of competition
Long contract duration increases risk exposure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $74.2 million to RAYTHEON COMPANY. F15, ACAT III, IDENTIFY FRIEND OR FOE, RETROFIT OF APX-114 AND APX-119

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $74.2 million.

What is the period of performance?

Start: 2019-02-26. End: 2026-01-31.

What is Raytheon's track record with similar Identification Friend or Foe (IFF) system upgrades for the U.S. Air Force?

Raytheon has a long history of providing avionics and defense systems to the U.S. military, including IFF systems. They are a major contractor for various aircraft platforms. While specific details on past APX-114/119 retrofit contracts are not publicly detailed in this data, Raytheon's extensive experience in military electronics suggests a strong capability. However, past performance on similar sole-source contracts could reveal patterns of cost overruns or schedule delays, which would be a key area for further analysis. Reviewing past performance reviews and contract modifications for Raytheon's IFF work would provide a clearer picture of their reliability and efficiency in executing such upgrades.

How does the $74.2 million cost compare to industry benchmarks for similar avionics retrofits?

Benchmarking this $74.2 million contract is challenging without more specific details on the scope of work, such as the number of aircraft being retrofitted and the complexity of the APX-114 and APX-119 system upgrades. However, the sole-source nature of this award raises a red flag regarding potential price inflation compared to a competitive procurement. Industry benchmarks for avionics retrofits can vary widely based on aircraft type, system sophistication, and integration requirements. Generally, competitive procurements for similar avionics upgrades might yield lower per-unit costs. A detailed cost analysis comparing this contract to other sole-source or competitively awarded IFF or similar avionics upgrade contracts for comparable military aircraft would be necessary to assess value for money.

What are the primary risks associated with this sole-source contract for IFF system retrofits?

The primary risk associated with this sole-source contract is the lack of competitive pressure, which can lead to inflated pricing and reduced incentive for the contractor to achieve optimal efficiency. Without competing offers, the government may not be securing the best possible value. Another risk stems from the long contract duration (2531 days), which increases the potential for scope creep, unforeseen technical challenges, and cost overruns, even with a Firm Fixed Price structure. Furthermore, reliance on a single supplier for critical IFF components could create supply chain vulnerabilities or make future upgrades more complex if the technology evolves rapidly.

How effective are Identification Friend or Foe (IFF) systems in enhancing air combat situational awareness and safety?

IFF systems are critically important for enhancing air combat situational awareness and safety by enabling aircraft to electronically identify themselves as friendly to other military assets. They operate by transmitting coded replies to interrogation signals from radar or other IFF interrogators. This allows combat identification (CID) systems to distinguish friendly forces from hostile ones, significantly reducing the risk of fratricide (accidentally engaging friendly aircraft) and improving the ability to track enemy targets. Modern IFF systems, like the APX-114 and APX-119, often incorporate advanced encryption and Mode 5 capabilities, providing a more secure and reliable identification solution essential for complex, high-threat environments.

What is the historical spending trend for IFF system procurements and upgrades by the Department of Defense?

Historical spending on Identification Friend or Foe (IFF) systems and their upgrades by the Department of Defense (DoD) has been substantial and consistent, reflecting the system's critical role in air operations. The DoD regularly invests in modernizing IFF capabilities to counter evolving threats and ensure interoperability across different branches and allied forces. This includes upgrades to newer modes like Mode 5, which offers enhanced security and crypto-agility. While specific aggregate spending figures for IFF systems alone are not readily available without deep dives into defense budget documents, it is part of the broader avionics and command, control, communications, computers, and intelligence (C4I) spending categories, which collectively represent billions of dollars annually. The trend is towards more secure, digital, and integrated IFF solutions.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA863418R2700

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 6260 GUARDIAN GATEWAY, ABERDEEN PROVING GROUND, MD, 21005

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $105,863,767

Exercised Options: $74,594,795

Current Obligation: $74,168,439

Actual Outlays: $3,271,037

Subaward Activity

Number of Subawards: 32

Total Subaward Amount: $6,746,387

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline